Earnings Preview: Facebook Inc (FB) And Yelp Inc (YELP)

Earnings Preview: Facebook Inc (FB) And Yelp Inc (YELP)
By User:ZyMOS [Public domain], via Wikimedia Commons

Yelp Inc (NYSE:YELP) is scheduled to release its earnings results for the third quarter after the market close on Wednesday, October 22.

Analyst at Stifel expected that the earnings results of Yelp Inc (NYSE:YELP) for the current quarter would remove doubts from weaker the expected local advertiser additions during the previous quarter.

Stifel analysts Scott Devitt and his team observed an increased competition particularly from Facebook Inc (NASDAQ:FB), which introduced its local awareness ads earlier this month. The analysts will watch carefully the earnings results of Yelp Inc (NYSE:YELP).

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Earnings estimate for Yelp

For the third quarter, Devitt and his fellow analysts estimated that Yelp Inc (NYSE:YELP) would be able to deliver GAAP earnings of $0.03 per share, in line with the consensus estimate.

Its adjusted EBITDA is expected at around 19.6 million compared with its guidance of $18 million to $19 million and consensus estimate of $19.2 million.

Yelp’s revenue is expected to be around $99.4 million, slightly higher than the $99 million consensus estimate and its guidance in the range of $98 million to $99 million. The analysts said the company’s revenue reflects a continued trend of beating its top-line guidance.

When it comes to local advertiser additions, Devitt and his colleagues estimated that Yelp Inc (NYSE:YELP) added 6.5K to 86.4K in the third quarter. Its international revenue is expected to increase to $3.5 million or 3.5% of total revenue.

“Yelp has underperformed many of its high-growth Internet peers since its second quarter report…The slower than expected addition of local advertisers combined with slow growth in international revenue caused some investors to question the ultimate addressable market of the company,” according to Devitt and his colleagues.

Stifel has a Buy rating for Yelp Inc (NYSE:YELP) with a price target of $85 per share.


Earnings estimate for Facebook

On the other hand, Facebook Inc (NASDAQ:FB) is expected to report its earnings results for the period on Tuesday, October 28.

Analysts at Goldman Sachs perceived a potential upside risk to their earnings and sales estimates for the social network giant. According to them, investors will primarily focus on the mobile ad growth, pricing/impression trends and color around new ad formats and initiatives of Facebook Inc (NASDAQ:FB).

Earnings Preview: Facebook Inc (FB) And Yelp Inc (YELP)

Goldman Sachs analyst Heather Bellini and her team estimated that Facebook Inc (NASDAQ:FB) would be able to achieve non-GAAP earnings of $0.44 per share on $3.22 billion revenue.

Wall Street analysts have a consensus estimate of $0.40 in earnings per share on $3.11 billion in revenue.

Bellini and her team expected Facebook Inc (NASDAQ:FB) to generated $3 billion in total ad revenue and $1.86 billion in mobile ad revenue compared with the consensus estimate of $2.88 billion in total ad revenue and $1.87 billion in mobile ad revenue.

The social network giant’s impression group was expected to be -15Y and CPMs at +97%.

“Overall, our checks indicated strong pricing trends, with partners citing CPMs increasing in a wide range of 20-80% qoq vs. our estimate of +12%. Our checks consistently noted that click through rates improved in 3Q14 given the effectiveness of targeting, driving CPMs up but also requiring fewer impressions. We see this dynamic as a factor potentially putting our ad impression forecast at risk, but also serving as upside potential to our CPM growth estimate,” according to Bellini and her team.

Furthermore, the analysts noted that the mobile advertising momentum of Facebook Inc (NASDAQ:FB) continued in the third quarter, and its budgets are well-positioned for 2015.

Goldman Sachs maintained its Buy rating and $85 price target for the shares of Facebook Inc (NASDAQ:FB).

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